I’m going to guess that’s 15-bit colour (32,768 colours) in the form of RGB channels, 5 bits per channel (32 possible values).
For full colour imagery, I imagine you’d still want dithering to simulate higher bit depths. 300dpi is fine enough that I believe you could make it very subtle indeed, so that you could well have to examine it quite closely to notice.
> It will be able to display over 40,000 different colors
… but then again, maybe it’s not done as RGB data in this way. I have no idea what array of inputs a range of 40,000 would correspond to. I’m not familiar with this sort of hardware.